Section 10, Next Day Availability Items

Section 10, Next-Day Availability Items

The first category of deposits we are going to look at are those described in Section 10 of Regulation CC [12 CFR 229.10]. Regulation CC requires that these deposits be made available on the first business day after the banking day of deposit if the customer meets certain conditions. Following is a list of the types of deposits that are subject to next‑day availability, the conditions that must be met for the deposit to be subject to next-day availability, and what the availability time frame is if the conditions are not met.

Cash (U.S. Currency and Coins)

[12 CFR 229.10(a)] Conditions for next-day availability: Deposit must be made in person to an employee of the depository bank. If not, funds must be available for withdrawal by the second business day after the banking day of deposit. [12 CFR 229.10(a)(2)] However, Section 4-213(5) of the Uniform Commercial Code (UCC) states that “money” deposited “in a bank” must be available at the opening of business on the first banking day after receipt of the deposit. The Federal Reserve Board has determined that in circumstances where a deposit is not made in person to an employee of the bank, but where it is still considered made “in a bank,” the UCC provision supersedes Regulation CC. [12 CFR 229, Appendix F] In other words, you will have to make a deposit of cash available on the next business day even if it is not made in person to an employee if it is made “in a bank.” Unfortunately, neither the UCC nor Regulation CC nor the Commentary deals with what is meant by the words “in a bank.” (The FRB determination had to do with the old Section 4-213(5). Almost all states have now adopted a revised version of Articles 3 and 4 of the UCC, and the equivalent provision now appears in Section 4-215(f). The revised version adds “Subject to applicable law stating a time for availability of funds….” This addition may authorize a “bank” to rely on the Regulation CC conditions on next-day availability described at the beginning of this paragraph.)

Electronic Payments (Wire Transfers or ACH Credit Transfers)

[12 CFR 229.10(b)] Conditions for next-day availability: None. Availability must be by first business day after the depository bank receives the payment, and receipt of the payment is defined as receipt of: (1) payment in actually and finally collected funds, and (2) information on the account and the amount to be credited. [12 CFR 229.10(b)(2)]

Although Regulation CC requires that electronic payments be available no later than the first business day after receipt of the payment, other regulations may require quicker availability. For example, Treasury regulation 31 CFR 210 requires that federal government ACH payments be available at the opening of business on the payment date. ACH association rules encourage banks to make direct deposits of payroll funds available on the payment date. Also, Article 4A of the Uniform Commercial Code and Regulation J require, with respect to funds transfers, a beneficiary’s bank to make funds available from a payment order on the “payment date,” as that term is defined in those rules. (For details, see the chapter in this manual entitled “Wholesale Funds Transfers: Article 4A of the UCC and Subpart B of Regulation J.”) These requirements are not preempted by Regulation CC if these requirements establish quicker availability. Regulation CC only sets an outside time limit for when funds must be made available. Any rules requiring quicker availability continue to be effective.

U.S. Treasury Checks

[12 CFR 229.10(c)(1)(i)] Conditions for next-day availability: Deposit must be made to an account held by a payee of the check. If not, the check is considered a local check, governed by Section 12, the permanent schedule. [12 CFR 229.12(b)(2)] (See later section dealing with permanent schedule time frames.)

U.S. Postal Service Money Orders

[12 CFR 229.10(c)(1)(ii)] Conditions for next-day availability: Deposit must be made to an account held by a payee of the check and must be made in person to an employee of the depository bank. If the deposit is not made in person but meets the other condition, then the deposit need not be made available until the second business day. [12 CFR 229.10(c)(2)] If the deposit is not made to an account held by a payee of the check, then the check is considered a local check, governed by Section 12, the permanent schedule. [12 CFR 229.12(b)(3)] (See later section dealing with permanent schedule time frames.)

Checks Drawn on a Federal Reserve Bank or a Federal Home Loan Bank

[12 CFR 229.10(c)(1)(iii)] Conditions for next-day availability: Deposit must be made to an account held by a payee of the check and must be made in person to an employee of the depository bank. If the deposit is not made in person but meets the other condition, then the deposit need not be made available until the second business day. [12 CFR 229.10(c)(2)] If the deposit is not made to an account held by a payee of the check, then the check is treated as either a local or nonlocal check, depending on whether the drawee bank is located in the same Federal Reserve check-processing region as the depository bank, and is governed by Section 12, the permanent schedule. [12 CFR 229.12(b)(4) and (c)(1)(ii)] (See later section dealing with permanent schedule time frames.)

Checks Drawn by a State or Unit of General Local Government

[12 CFR 229.10(c)(1)(iv)] Conditions for next-day availability are that the deposit: (1) must be made to an account held by a payee of the check, (2) must be made to a depository institution located in the state that issued the check or in the same state as the unit of local government that issued the check, (3) must be made in person to an employee of the depository bank, and (4) must be accompanied by a special deposit slip or envelope identifying it as a next-day deposit if the deposit slip or envelope is required by the depository bank. If the deposit is not made in person but meets the other conditions, then the deposit need not be made available until the second business day. [12 CFR 229.10(c)(2)] If any of the other conditions are not met, then the check is treated as either a local or nonlocal check, depending on whether the drawee bank is located in the same Federal Reserve check-processing region as the depository bank, and is governed by Section 12, the permanent schedule. [12 CFR 229.12(b)(4) and (c)(1)(ii)] (See later section dealing with permanent schedule time frames.)

Cashier’s, Certified, and Teller’s Checks

[12 CFR 229.10(c)(1)(v)] Conditions for next-day availability are that the deposit: (1) must be made to an account held by a payee of the check, (2) must be made in person to an employee of the depository bank, and (3) must be accompanied by a special deposit slip or envelope identifying it as a next-day deposit if the deposit slip or envelope is required by the depository bank. If the deposit is not made in person but meets the other conditions, then the deposit need not be made available until the second business day. [12 CFR 229.10(c)(2)] If any of the other conditions are not met, then the check is treated as either a local or nonlocal check, depending on whether the drawee bank is located in the same Federal Reserve check-processing region as the depository bank, and is governed by Section 12, the permanent schedule. (See later section dealing with permanent schedule time frames.)

A cashier’s check is a check drawn on a bank, by that bank, and provided to a customer of the bank or to a noncustomer for remittance purposes. [12 CFR 229.2(i)] A certified check is a check that is signed by an authorized employee of a bank in order to certify that the drawer’s signature is genuine, the bank has set aside funds to pay the check and that it will do so. [12 CFR 229.2(j)] A teller’s check is a check drawn by a bank but drawn on or payable through another bank and that is provided to a customer of the bank or to a noncustomer for remittance purposes. [12 CFR 229.2(gg)] The words “provided for remittance purposes” in the definitions of cashier’s and teller’s checks mean that the person to whom the check was issued will use the check for remittance purposes. The definitions exclude checks issued by banks to their employees and vendors. [Commentary, §229.2(i)-1 and §229.2(gg)-1]

“On us” Checks (checks deposited in a branch of the depository bank and drawn on that branch or another branch of the same bank)

[12 CFR 229.10(c)(1)(vi)] Conditions for next-day availability: The branch in which the deposit is made and the branch on which the check is drawn must be located in either the same state or the same Federal Reserve check-processing region. (Remember, there is only one check processing region now). If the branches are in neither the same state nor the same check-processing region, then the check is treated as a nonlocal check, governed by Section 12, the permanent schedule. [12 CFR 229.12(c)(1)(ii)] (See later section dealing with permanent schedule time frames.)

The first $200 [$225 effective 7/1/20] deposited in any one banking day by checks that are not subject to next-day availability under one of the Section 10 categories above

[12 CFR 229.10(c)(1)(vii)] Conditions for next-day availability: That the deposit be made other than at a nonproprietary ATM. This rule does not apply to deposits made at nonproprietary ATMs. [Commentary, §229.10(c)-5a]

Note: The $200 amount had been $100. In fact, Regulation CC still refers to the amount as being $100. However, this $100 amount actually became $200 on July 21, 2011. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended the Expedited Funds Availability Act by increasing from $100 to $200 the amount of deposited funds that a bank must make available for withdrawal by opening of business on the next day. This amendment had an effective date of July 21, 2011. Furthermore, the $200 amount was to be adjusted every five years following December 31, 2011, to reflect inflation.

The Final Rule added new Section 11, 12 CFR 229.11, specifically to address the Dodd-Frank Act required every five-year adjustments. Section 11 references the dollar amounts specified in Section 10 (12 CFR 229.10(c)(1)(vii) – next-day availability of certain check deposits), Section 12 (12 CFR 229.12(d) – availability schedule time period adjustment for withdrawal by cash or similar means), Section 13 (12 CFR 229.13(a), (b) and (d) – exceptions for new accounts, large deposits and repeated overdrafts), and Section 21 (12 CFR 229.21(a) – civil liability). Section 11 requires these amounts to be adjusted effective July 1, 2020, on July 1, 2025, and on July 1 of every fifth year after 2025. Section 11 also includes indexing and inflation measurement procedures for these adjustments.

Effective July 1, 2020, the $200 amount will be $225.

Remember, you only count deposits by check toward the $200 [$225 effective 7/1/20] amount. Regardless how much the customer deposits by way of cash or electronic payments on a given banking day, you must still make the first $200 [$225 effective 7/1/20] of checks deposited that day that are not already subject to next-day availability because of the categories previously listed available by the first business day after the day of deposit. Finally, this $200 [$225 effective 7/1/20] rule also applies to checks that would have had next-day availability but did not because they did not meet one or more of the conditions on next-day availability (e.g., a cashier’s check not deposited in person to an employee of the depositary bank). See Q&A 2, in the Regulation CC Exercises section later in this chapter.

Several of these categories had as a condition of next-day availability that the customer use a special deposit slip or envelope if that condition was required by the depository institution. Regulation CC allows you to require your customers to use a special deposit slip or envelope identifying the deposit as a next-day deposit as a condition of next-day availability. [12 CFR 229.10(c)(3)(i)] If you do make it a condition of next-day availability, then you must disclose that condition in your initial disclosure [12 CFR 229, Appendix C, forms C-4 and C-5], and you must either provide the slips or envelopes to your customers or make the slips or envelopes reasonably available to your customers. [12 CFR 229.10(c)(3)(ii)] For example, if you generally make deposit slips available in your lobby, you must make the special deposit slips available in your lobby, also. You can require that your customers segregate their next-day deposits from other deposits and make a notation on a regular deposit slip, flagging the deposit as a next-day deposit. However, you must disclose that procedure in your initial disclosure if that’s what you want your customers to do. [Commentary, §229.10(c)-6.e.] If you make the special slips available only on request of the customer, either your tellers must inform customers of the availability of the slips or you must post notice to the effect that the slips are available on request.

Several other categories had, as a condition of next-day availability, that the deposit be made in person to an employee of the depository bank. Deposits that are picked up by a bank employee at the customer’s premises are not considered made in person to an employee of the depository bank. Such deposits are considered made at the time they are received at the depository bank (or appropriate branch) and are subject to the second-day availability maximum time frame. [Commentary, §229.10(c)-3a]